FINANCE - Capital Budgeting Report and Analysis
Overview
Following the recent state and federal government approvals of Adani's Carmichael mine in the Galilee Basin in western Queensland, refer link:http://www.abc.net.au/news/2016-04-03/mning-leases-approved-carmichael-mine-qld-galilee-basin-adani/7295188, a representative of a mining company has approached you to undertake some preliminary financial analysis on their behalf.
The company, which plans to remain anonymous at this stage, wants you to evaluate the relative feasibility of two options for transporting coal from their mine pit to the railway line (approximately 80km) that will service the Carmichael mine. With most mine-to-port/rail type analysis, the company understands that it can transport the coal by road (truck), conveyor or rail. However, given the distance to travel and limitations associated with the electricity infrastructure in the area, the company has limited its choices to either road or rail. Information on the road and rail transportation options is available in the ‘Initial Information' file provided.
Task
Based on the information provided, the representative has asked that you provide a detailed financial analysis of each transportation option and prepare a report that recommends a preferred option from those available. The following requests have been made about the analysis and report:
- The financial analysis is to be completed in Excel. The file is to be easily adjustable for different scenarios and all inputs must be in the one sheet called ‘Assumptions' with the analysis of each option conducted on a separate sheet.
- The report is to be short (600 words + 20% tolerance) and written in a manner that can be understood by a person with a basic understanding of financial terminologies and analytical tools.
- The report sections to include: Summary, Methodology, Recommendations and Limitations.
-Summary: outlines the task and advises of the recommendation.
-Methodology: must explain and justify the methodology employed.
-Recommendations: recommends a preferred option from those available. In addition, includes some further analysis on whether an assumption of $0 ‘wages' would affect the recommendation. This additional analysis is requested given recent developments with automated trucks and trains in the mining sector.
-Limitations: must identify key limitations with the analysis.
Attachment:- Finance Initial Information.rar